Mortgage Refinance Pros and Cons: What to consider when deciding if a home loan refinance is right for you.
You will hear me say again and again, when it comes to mortgage refinance everything is to be considered case by case- there are no blanket statements that work for everyone.
In this video, I give two specific examples and break down the pros and cons for each situation of choosing to refinance the mortgage. I also cover my list of the major pros and cons anyone considering refinancing a home loan needs to know.
If you're wondering if refinancing is right for you, download the Mortgage Refinance Cost vs Savings Checklist here: https://bit.ly/SWCheck
Hello, everybody, Stephanie Weeks here.
Top 1% loan officer in the nation several years running.
You have come to the right place if you're looking for anything mortgage education.
Please be sure to subscribe to my channel, like at the end if you like the video and thank you again for stopping in.
So today we're talking about pros and cons of refinancing your home.
So you will see throughout my different videos, there are so many times that I am gonna say that everything is gonna be case by case, right?
There is not a blanket statement of this is always a positive and this is always a negative about home refinancing.
So let's take some examples.
Let's just say that you're looking to refinance your home and you are planning on being relocated, let's say, or anticipating a relocation of your job in the next two ways.
In that example, a pro would be, if you're saving enough money on your monthly payment, and your breakeven point is definitely around 12 months or less, you don't want it to be breakeven at 24 months when you're about to sell it, right?
That would be a pro.
Saving money, saving interest, having a quick breakeven.
That would be a pro of refinancing your home, even though you're gonna move out in two years.
Here is another example.
And I actually had someone with this yesterday.
I had a client and he's been in his home for 10 years.
He has accelerated his monthly payments by paying several hundred extra every single month.
And he owed around $170,000 on his home.
His current interest rate is only 4.25%, which is still not a bad rate but in this example, we were able to price out a rate for him of 2.87% in that current market with his exact situation.
So my point in telling you this is that when we looked at the amortization schedule, amortization schedule, and compared his current loan and the track that he's on, 10 years in, which means 20 years left, front-loaded interest, compounded principal payments, he would have actually lost money, and I did say that correctly, to refinance to another 20 or 30-year mortgage on his balance because he would start out paying more interest, again, it's front loaded, than he was paying currently today.
So think about that for a second.
2.875% in comparison to 4.25% and for him, it did not make sense to refinance.
So his con would have been it would have cost him more money and not put him in a better situation.
I hope that helps and makes sense.
Remember, if you like this video, please do hit the like button, don't forget to subscribe and also, please share my videos and my channel with your friends.
My goal is to keep everyone, well, no, not keep but make everyone much more educated when it comes to mortgages.
So let's dive into something else.
A couple of other pros versus cons of refinancing your mortgage.
You always want to compare your cost in relation to your breakeven.
Then you need to figure out, or have your loan officer figure out, and you talk with them about how long you're gonna live in the home, how long you're gonna keep the property, how long you've paid into the current loan, right?
Because a pro would be to save money.
A pro would be to shorten your term.
A pro might be to consolidate debt.
A pro would be to lower your monthly payment.
But a con would be if you pay too much money for that or your cost versus breakeven is too long based on your plans.
I really hope you like this.
I hope it was helpful.
I hope it was educational with regards to pros and cons of refinance.
Drop me a message, a comment.
I'd love to hear any feedback that you have.
If you wanna analyze your cost versus breakeven with refinancing your home, click the link below to get that checklist.
And thank you again for tuning in.
Have a fabulous day.
Every year an average of 21 million people apply for mortgages in the US, and only around 7 million close. I'm on a mission is to change that by spreading mortgage education. Sign up for my newsletter to be a part of my Mortgage Peace Movement!